TAXABLE SERVICES ADDED BY ICAI IN SERVICE TAX FOR MAY 2011 AND NOV 2011
Question: 1
Discuss the status of taxation for Cargo Handling Services [Sec 65(105) (zr)]
Answer:
Meaning
i. Cargo Handling Services means [Section 65(23)] Loading, Unloading, Packing or
Unpacking of cargo and includes specified activities.
ii. Taxable service [Section 65(105) (zr)]: Service provided in relation to cargo handling
service by a cargo handling agency to any person
Persons liable to
pay tax
i. Inclusion:
a. Cargo Handling Agencies,
b. Freight Terminals including Container Freight Terminal.
ii. Exclusion: Ports providing Cargo Handling Services
Taxable Services
i. Cargo handling services provided for freight in Special Containers / Non-
Containerized Freight.
ii. Services provided by an Inland Container Depot (ICD) or a Container Freight such as
a. Receipt, dispatch or delivery of cargo;
b. Stuffing and stripping of containers;
c. Transit operations by rail / road to and from serving ports;
d. Temporary storage of cargo containers etc.
iii. Services provided by Freight Terminal, for all modes of transport;
iv. Cargo handling services incidental to Freight
v. Services of transshipment of Import Cargo from international to domestic carrier.
vi. Packing together with transportation of cargo or using services like loading,
unloading, unpacking
Non – taxable
Services
i. Services relating to Agricultural Produce / goods intended for cold storage.
ii. Transportation of goods;
iii. Handling of Export Cargo / Passenger Baggage.
iv. Marketing or canvassing for cargo for Airlines
v. Service of auction of abandoned cargo
vi. Cargo handling services provided in the port (Port Services)
vii. Supply of labour for handling the cargo (Manpower Recruitment and Supply Services)
viii. Storing, Washing, Repairing and Handling of empty containers for shipping lines.
(Storage and Warehousing Services; Port Services if rendered within a Port)
Question: 2
Members of the Commerce Profession i.e., Chartered Accounts, Company Secretaries, Cost
Accountants are liable to pay service tax for services rendered by them Discuss. [Sec 65 (105) (u), 65
(105) (t)]
Answer
Meaning
i. Practicing Chartered Accountants [Sec 65(83)]: Members of the
Institute of Chartered Accountants of India holding Certificate of
Practice.
ii. Practicing company secretaries [Sec 65(85)]: Members of Institute of
Company Secretaries of India holding Certificate of Practice.
iii. Practicing Cost Accountants [Sec 65(84)]: Members of Institute of
Cost and Works Accountants of India holding Certificate of Practice.
Persons liable to pay tax Independent Practitioners and Firms of PCAs / PCSs / PCWAs
Taxable Services
All services provided by Practicing Chartered Accountants, Practicing
Company Secretaries and Practicing Cost Accountants, in their
professional capacity.
Non-taxable Services
i. Services relating to Teaching, Placement etc. (not deemed to be
provided in professional capacity)
ii. Services in relation to representation before Statutory Authorities if
such representations are in the course of proceedings initiated under
any law for the time being in force, by way of issue of notice.
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Question: 3
Services rendered by Professional Engineers are liable to Service Tax. Explain. [Sec 65(105)(g)]
Answer
Meaning
[N 03, RPT]
i. Consulting Engineer refers to [Section 65(31)] –
a. Qualification: Professionally Qualified Engineer or any other Body
Corporate or any other Firm;
b. Service: Rendering advice, consultancy or technical assistance in any
manner to any person
c. Area: In any discipline of Engineering including Computer Hardware
Engineering and Computer Software Engineering.
ii. Taxable Service [Section 65(105)(g)] – Service provided to any person by a
Consulting Engineer in relation to advice, consultancy or technical assistance
in one or more disciplines of engineering.
Persons liable to
pay tax
i. Includes: Consulting Engineers, Engineering Firms, Project Consultants, Firms
engaged in supply of designs, drawings, Technical Assistance.
ii. Excludes:
a. Individuals, not holding any degree or Diploma in Engineering, rendering
Consulting Engineering Service
b. Firms engaged in Post Sale Services
c. Engineers dealing with sea worthiness of ships.
Taxable Services
[M 09]
i. Services provided in the discipline of computer hardware engineering and
computer software;
ii. Services of Valuation
iii. Soil Testing, Land Surveys, Structural Engineering Works, Civil, Mechanical or
Electrical engineering, Construction Management, Survey, Planning, Supply of
drawings and Designs etc.
iv. Services provided by self employed professionally qualified engineer.
Non-Taxable
Services
i. Testing laboratories, Supply of marine crafts, Piloting of vessels from
anchorage, Pollution Control Steps, Overseas Project;
ii. Services of certification or inspection Carried out as legal requirement under
a statute or code [Technical Inspection and Certification Service];
iii. Services of soil testing;
iv. Supply of Technical Manpower [Manpower Recruitment and Supply Agency
Services].
v. Works Contracts Service
vi. Commissioning, Erection & Installation etc.
vii. Payment of royalty for use of Technical know How, Brand Name, Trade Mark,
Patent etc.; [Intellectual Property Service]
viii. Providing training to customers for correct use of technology
Specific
Exemption
Exemption for the amount of Cess paid under Sec 3 of R & D Cess Act, 1986 from
the amount of Service tax payable under Consulting Engineer’s Service.
Question: 4
Who is a Custom House Agent? Are all his services taxable? [Sec 65(105)(h)]
Answer
Meaning
i. Custom House Agent refers to a person licensed, temporarily or otherwise,
under regulations of the Customs Act. [Section 65(35)]
ii. Taxable service [Section 65(105)(h)] - Service provided in relation to the
entry or departure of conveyances or the Import or Export of goods to any
person [W.e.f. 16.05.2008] by a Custom House Agent.
Persons liable to pay
tax
i. Inclusions: Licensed Custom House Agents (CHAs).
ii. Exclusions: Unlicensed Agents, Agents working under Sub-Contract basis and
rendering service to the main CHA.
Taxable services
Services in relation to ---
i. Entry or Departure of Conveyances --- Filing of Import / Export General
Manifest, Arranging for loading or discharge of cargo; Obtaining Entry Inwards
or Entry Outwards;
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ii. Import or Export of Goods ---
a. Clearing of Import /Export Consignment
b. Loading / Unloading of Import / Export Goods
c. Packing, Weighment, Measurement of Export Goods
Carrying out statutory or other formalities (like payment of Octrol, Dock Fees,
Survey Fees; and activities like destuffing, pelletisation, terminal handling,
fumigation etc.)
Question: 5
Manpower Recruitment Agencies have been brought into the Service Tax net. Highlight the
important provisions applicable to them. [Sec 65(105)(k)]
Answer
Meaning
i. Manpower Recruitment and Supply Agency are [Section 65(68)]—
a. Persons (Individuals, Firms, Companies, Educational Institutions
etc.)
b. Providing any service for recruitment or supply of manpower
(either directly or indirectly)
c. To a client, temporarily or otherwise.
ii. Taxable service [Section 65(105)(k)]: Service provided in relation to
the recruitment or supply of manpower to a Client by a manpower
recruitment or supply agency. w.e.f 16.05.2008, services provided
to any other person.
Persons liable to pay
tax
i. Manpower Recruitment Agencies.
ii. Manpower Suppliers.
iii. Consultants, Labour Contractors, CA / CS / CWA, Management
Consultants.
iv. Placement Bureaus.
v. Experts rendering services for interviews on regular basis.
Taxable services
i. Placement Services, Arranging Interviews, Counseling, Manpower
Database, Paid Websites for Manpower Recruitment.
ii. Pre-recruitment Screening, Verifying the credentials and antecedents
of the candidate, authenticity of documents submitted by the
candidates.
iii. Temporary supply of manpower by manpower recruitment agency.
iv. Educational institutes like IITs and IIMs charging fees from
Prospective employers for recruiting candidates through Campus
Interviews.
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